HD DVD returns and kicks Blu-ray to the gutter

HD DVD returns and kicks Blu-ray to the gutter

Summary: Just when Blu-ray thought it had clear sailing, a tempest has risen in the East: China Blue Hi-definition Disk (CBHD). Toshiba has licensed its HD DVD to them and it will be the unit world leader in HD optical technology in just 12 months.

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Just when Blu-ray thought it had clear sailing, a tempest has risen in the East: China Blue Hi-definition Disk (CBHD). Toshiba has licensed its HD DVD to them and it will be the unit world leader in HD optical technology in just 12 months.

Why? The Times Online reports that the CBHD players are outselling Blu-ray in China by 3-1 and the CBHD disks cost a quarter of Blu-ray.

Blu-ray, we hardly knew ye What happened to Blu-ray's dominance? Blu-ray's dominance.

Conceived by Sony at a time when few thought upscaling would succeed, the idea was that HDTVs would require HD content on optical media. Reliving the glory days of DVD adoption they forecast tens of billions in revenue from players and disks, enormous licensing fees and consumer-proof DRM.

Watching the CD business crater, studio thought that HD would drive their business to new heights while eliminating piracy. It was an optical gold rush - that has turned into a mirage.

The fundamental problem is that the slightly sharper HD picture isn't worth the extra dollars. 10%-15% max.

Enter the dragon China has good reasons to support a home-grown HD format. First, the exorbitant Blu-ray royalties hurts Chinese manufacturers ability to compete on price.

An equally important, but unspoken, issue is the econoclypse. The Chinese government has made a deal with the Chinese people: leave us in control and we'll deliver rising living standards. The current slow down has hit China hard: millions have been laid off and economic growth is anemic.

CBHD is a double win for the Chinese government: billions saved in royalties; and a much cheaper, locally manufactured, luxury item for the restless masses. Blu-ray is simply collateral damage.

Studio knuckle-draggers no doubt are salivating at a tough new form of Region encoding: incompatible formats for the West and Asia. But will that really work?

English is the #2 language in Asia, so English-language CBHDs will be popular. Shanghai vendors will happily sell CBHD players and disks on Ebay. The economics are irresistible and, other than the studios, who will turn down HD content at DVD prices?

The Storage Bits take Toshiba's gambit is brilliant. Instead of taking a total loss on their billion-dollar HD DVD investment, they'll get incremental revenue and, no doubt, valuable future consideration from the Chinese government.

It is a nice win for the Chinese government and manufacturers. Blu-ray's high cost has slowed its acceptance to a crawl, so Chinese CBHD players will rapidly climb down the cost curve to prices lower than DVD-only players since they aren't paying DVD royalties either.

The studios get a couple of years to make some money on Chinese CBHD releases, but will piracy disappear? Not anytime soon.

The big loser is the Blu-ray camp. Boo-hoo. They've consistently misjudged the market and Blu-ray's appeal. Guys, I'm sorry you made a bad business decision, but it's time to man up and take your write-offs.

CBHD vendors should not ignore the writable CBHD market. Many consumers would like something larger than DVDs for backup and much cheaper - and more compatible - than Blu-ray.

Here's hoping the CBHD storage market is running wild by this time next year. CBHD will be the world's #1 format in unit volume by next year.

Comments welcome, of course. Who vetted that name? China Blue was Kathleen Turner's alter-ego in Ken Russell's outrageous Crimes of Passion. A prostitute by night, hard-charging professional woman by day and a constant temptation to Tony Perkins' street preacher, she is certainly not a character the prudish Chinese government would endorse.

Topics: Hardware, Government, Government US, Mobility

About

Robin Harris has been a computer buff for over 35 years and selling and marketing data storage for over 30 years in companies large and small.

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399 comments
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  • Well researched

    The problem with Blu Ray is the royalty aspect of this format.
    Thousands of dollars just to use their logo on the Jacket Cover and so on.

    Maybe this chinese will work.
    Ashtonian
    • Wrong

      No new format will work without the support of the movie companies and China is a pirate market where they sell nothing legit. This story is NOT well researched, it was written by someone who doesn't know their arse from their elbow
      Bobulon
      • TOSHIBA JOINING THE BDA

        The company that licensed the remnants of HD DVD for the chinese CBHD format (ie. TOSHIBA) apparently sees enough success in Blu-ray's future to join the BDA. So how is @ssH@t Robin Harris going to spin this?

        "Toshiba infiltrates the BDA... Blu-Ray death coming soon"

        Too hilarious... RH proven to be an @ssh@t blowhard again.
        CaW2
    • One big problem for BluRay

      has always been the massive cost of buying a BluRay disk production line. Its costs millions. By contrast, HD-DVD and CBHD disks can be made on a modified DVD production line. That opens the replication business to hundreds of much smaller businesses, and hence to a wider variety of titles.

      China makes a LOT of movies themselves. Having a local format for these should work well. The Chinese government probably doesn't feel it is losing anything if Hollywood decide not to play. But in any case, the studios will follow the money as they always do. Thats the only way to survive these days.
      A.Sinic
      • time to wipe the mold off your...

        arguement. BD was more expensive to produce initially due to it being a new technology. Replication cost is no longer a huge issue 18 months post format war.

        BD50 has been proven to work reliably. More BD capable production lines are being put on-line to keep up with demand and...

        BD still has tremendous growth potenetial. It is one of the only home vid businesses to show significant growth during the recession.
        CaW2
        • I own both HD and BD. IMHO, Blu-ray is doomed...

          The studios are what's killing it. The players are plenty cheap now. The studios are pumping out plenty of content. But that content is way overpriced and creeping higher. As long as a good upscaling DVD player can nearly match the quality and the BD discs cost twice as much for new releases, it will never become a mass market replacement for DVD. Until the studios realize that VERY few people will pay twice as much for an incremental increase in quality, it will never take off. At some point, the retailers will start reducing their disc purchases due to growing overstocks and the market will just die off.

          And this doesn't even take into consideration the fact that HD streaming will soon become the preferred way to view your movie libraries. Who wants to take up half the living room with shelving for a movie collection when you can store an even bigger collection online and stream it on demand?

          Combine both of those elements, and BD's days are truly numbered.
          BillDem
          • Way to feed the ignorance.

            "As long as a good upscaling DVD player can nearly match the quality"

            Marketing BS. "Upscaling" to what? Your TV (if it's HD) already upscales ANY SD source, because it has to in order to fill the screen.

            "Who wants to take up half the living room with shelving for a movie collection when you can store an even bigger collection online and stream it on demand?"

            Ugh. Think it through. First of all, "half the living room"? Nice strawman. And storage online is NOT on-demand. You're dependent on whoever's storing it AND a constant Internet connection. That's gonna work great on a plane. Or in a car. Or in a hotel room. "Hey, let's grab a few movies to watch later!" "UH, I CAN'T."

            Not to mention the dogcrap quality of downloadable "HD" content at abysmal bit rates.

            Wake up and stop cheerleading the demise of real goods in exchange for your money.
            dgurney
          • Way to feed the ignorance, indeed...

            "You're dependent on whoever's storing it AND a constant Internet connection. That's gonna work great on a plane. Or in a car. Or in a hotel room. "Hey, let's grab a few movies to watch later!" "UH, I CAN'T.""

            Who's ignorant here. 1 TB hard drive (1 in x 4 in x 5 in) holds apx 800 movies (I know, that's my set-up). Your irony describes what I do when I travel: upload the movies to my iPhone, watch the movies on the plane and when at the hotel, use my HD cable (or RGB, or..whatever the TV set has) to plug the iPhoen to the room TV.

            What in hell do you want to buy a movie on a disc? The way USB key pricing is going, you'll buy your HD movie on it.
            minardi
        • ...

          the big arghuement against BR was always the royalty thing. Any new format will be costly, but the studios saw blu ray as a) a means to screw EVERYONE in the whole food chain and b) ram DRM down everyones throats

          epic fail
          paul_bruford@...
  • So is my HD-DVD player dead or not?

    In the US that is, what are the implications in the West - any chance this Chinese development will kill eventually off Blu Ray and make HD-DVD or its Chinese equivalent viable again? Please.
    eggmanbubbagee@...
    • I would be shocked....

      To see HD-DVD make a comeback in the US. I suspect a lot of businesses are still stinging from the losses from HD-DVD.

      Weirder things have happened though. If it does come back the road is going to be LONG.
      oncall
      • Agree - HD is still dead, but so is BD...

        Streaming HD will replace both. Netflix HD on demand and online HD video purchases will kill off both disc formats within a few years. Only DVD might survive for a while, mainly because it's cheap.
        BillDem
        • Stream what and how?

          I stream downloaded movies from my WHS to he PS3 over gigabit. With HD peaking at over 100 meg from time to time you've got no hope of streaming direct, in real time over the internet, as far as I can see.

          And are we really expecting to stream HD movies free or cheap enough to make it practical? I can't see it just yet.

          A quote from Netflix: "The quality of the display of the instant watching movies may vary from computer to computer, and device to device, and may be affected by a variety of factors, such as the bandwidth available through and/or speed of your internet connection. Netflix makes no representations about the quality of your instant watching display" That is most certainly NOT HD.

          I totally agree that Blu-Ray is overpriced. My tally being the three I was given as a gift. I prefer to download then stream to the PS3 but it's a fiddle at times.

          For me, the future may well be to buy a full hd download at a reasonable price and watch it via a dedicated media player. The popcorn hour looks good at the moment but I think we'll see some movement towards protected downloads and players that restrict transfer off them. If the price is right, count me in!
          johnmckay
          • Hum, let see..

            "I stream downloaded movies from my WHS to he PS3 over gigabit. With HD peaking at over 100 meg from time to time you've got no hope of streaming direct, in real time over the internet, as far as I can see."

            Guess I've been doing the impossible lately. Buying movies on iTunes and playing them using my AppleTV apx 10 sec after the purchase.
            minardi
        • More cheerleading for rip-offs

          Look at people ready to surrender their money in exchange for... nothing dependable. This is exactly what media vendors want: the ability to deny you what you paid for, any time, for no reason.

          "Oh, sorry, it's 'network congestion'".

          "Oh, your device chain isn't HDCP-compliant somewhere. Talk to your device manufacturer. Not our problem. No refunds."

          "Yes, you bought this movie, but you can't copy it to another device to take with you to grandma's house to entertain the kids. You watch at OUR convenience. Good bye."

          "Sure, 5 megabits per second is HD. It fills your screen, doesn't it?"

          And on and on.

          critical thinking = dead
          dgurney
    • CBHD and HD-DVD aren't quite the same.

      CBHD uses audio and video codecs developed by the Chinese for the same reason they aren't embracing blu-ray -- lower royalty payments.

      It's no doubt possible to make a device that plays CBHD and HD-DVD discs, but current HD-DVD players probably don't support the codecs CBHD uses. Maybe a firmware upgrade could add support?

      I would love to see this spread and show Sony that there's some value in putting the customer ahead of profits. Hopefully it'll also give me a new use for the HD-DVD drive in my HTPC.
      hungryjoe
      • Unlikely

        "Maybe a firmware upgrade could add support?"

        Typically such devices use hardware decoders, the firmware is simply to
        interact with the hardware decoders.

        HD-DVD is dead everywhere but in the blogs and forums of ZDNet.
        Richard Flude
        • Blu-ray is quite alive in Australia

          We're on China's backdoor step... theres ONLY talk of Blu-ray.

          There's thousands upon thousands of Blu-Ray discs in the shops, LOTS of players/disc recorders along with HDD & Blu-Ray disc players/recorders. The Blu-Ray players are much the same price as normal/high-end DVD players or the same price as DVD players just two years ago.

          The Blu-Ray discs are much the same price as normal DVDs. For brand new titles they might be one or two dollars more. Not twice the price as constantly inferred here.

          Blu-Ray is ALIVE and doing well in Australia... except for the blogs, ZDNet and the ZDNet forums - but of course, the self-importance of the article writer and their little tiny world, is more important than the truth of the world.
          GTRoberts100
          • Like that new glass house?

            "the self-importance of the article writer and their little tiny world, is more important than the truth of the world."

            I wouldn't be throwing stones, friend. Australia isn't exactly the entire world either...

            Sony is *also* an Eastern based company. I think Toshiba just quietly laid a rake in the grass for Sony to find face-first. :)

            CHD-DVD may not win but right now Blu-ray *isn't* doing all that well compared to DVD (not HD-DVD, garden variety DVD).

            I was buying some movies over the weekend at Wal-mart (yeah, I know. :)) and they had 1 panel of Blu-ray--to about 40 panels of normal DVDs.

            It's that way everywhere I shop (Middle of the US). DVD isn't dead and with a cheap alternative to Blu-ray people are going to take notice.

            Where, for example, are most DVD players built after all? :)
            wolf_z
          • I knew this format war wasn't over yet...

            I have a farely good DVD collection (~450 pcs)
            and I've held off on buying a bluray player,
            mostly waiting for prices to drop, but also for
            things to standardize. With upscaling my DVD's
            look pretty good and I don't see the quality
            being worth the upgrade yet. I will prob never
            repurchase most of those in my collection,
            perhaps a few of my favorites, or ones that
            were done REALLY well into high def, but I
            don't expect the formats to stick around that
            long. With divx and media center style
            entertainment, more TVs including streaming
            video support, I just think that the value of
            specific encoding will decrease. Then it just
            comes down to the technology of the disc. I
            have most of my movies backed up on a 2TB HDD
            as well as some (we'll call them) divx movies
            aquired else where. I really don't care about
            the actual disc format anymore. Granted I was
            quite supprised at house fast I can fill 2TBs
            but as my collection grows, so with HD
            capacities and I'll just keep adding on. My
            next addition will be some kind of drobo/raid
            setup. It won't need to be raid-5 cause if I
            loose data I still have the discs (that I never
            touch so they'll never be scratched).
            I only give it a few decades before the disc
            type is totally irrelevant. I'm sure you'll
            always be able to find hardcopies of media,
            cause not everybody will want to purchase off
            the net, so it'll still need to be stored on
            SOMEthing, but what it is stored on will be
            less relevant.

            I don't really care if HD-DVD makes a comeback,
            its a superior format in my opinion, but that
            hardly matters in the market. But I was kind of
            bored after bluray won, I hope theres more to
            this battle. Maybe it'll force bluray to drop
            licensing costs (yea right, they'll prob just
            concede defeat in a decade like they did with
            beta, you'd think they would have learned the
            first time.)
            shadfurman